High-end retail giant Saks Global has filed for bankruptcy protection, marking one of the largest retail collapses during the pandemic. This move follows a luxury merger involving Saks Fifth Avenue, Bergdorf Goodman, and Neiman Marcus. Despite the uncertain future of the iconic U.S. luxury brand, Saks has secured a $1.75 billion financing deal and appointed a new CEO to keep its stores operational.
The company, favored by affluent clientele, faced challenges post-COVID-19 due to rising online competition and brands focusing on direct sales. Vendor payment issues further strained its financial health. Geoffroy van Raemdonck, former Neiman Marcus CEO, replaces Richard Baker, the architect of Saks Global’s debt-laden acquisition strategy.
Saks Global’s assets and liabilities, estimated between $1 billion and $10 billion, were disclosed in bankruptcy court documents. The bankruptcy process aims to facilitate debt restructuring or a potential sale. The company emphasized that the demand for luxury goods remains strong, with inventory and vendor confidence being key issues.
The Neiman Marcus merger exacerbated debt amid a slowdown in global luxury sales. Industry experts noted the challenges of merging in a consumer-driven market. Saks Global, with 17,000 employees, previously raised $600 million and restructured debt to tackle financial troubles. However, liquidity constraints persisted due to vendor payment delays and inventory disruptions.
Facing cash shortages, Saks Global recently sold the Neiman Marcus Beverly Hills property and sought to sell a stake in Bergdorf Goodman. A new financing deal injects $1 billion immediately through a debtor-in-possession loan, with additional funding post-bankruptcy exit. Notable unsecured creditors include luxury brands like Chanel and Gucci.
Industry analysts predict a shift towards reduced department store reliance in the luxury sector, favoring owned channels and partnerships. Richard Baker’s earlier strategic moves reshaped the luxury retail landscape, uniting Saks, Neiman Marcus, and Hudson’s Bay Co. into Saks Global, a reflection of American high fashion heritage.
